The question of financial strategy and ethics apparently are polar opposites when talking about home ownership according to Jean Chatzky on the Today Show this morning. A short piece ran this morning showing the growing number of homeowners who aresimply choosing to walk away from their homes because the home value hasfallen to 75% of the amount owed. They have made this choice based on financial strategy,or as Jean Chatzky calls it, "strategic default". When asked by Matt Luaer if this is an ethical decision, her response was basically that ethics has nothing to do with the decision. It is a financial decision. Bear in mind, many of the people walking away from these homes can make the payment. They have simply chosen not to because it doesn't make sense to them financially. Well, excuse me!
First of all, real estate investment is not a guaranteed profit. Sometimes you win and sometimes you lose. I've often heard it said that you make money on real estate whey you buy it, not when you sell it. In other words, if you're looking to make a profit, make darn sure you're buying low and you can hold on to it for some time.
Secondly, if you have promised to do something, do it. The bank promised to loan you money for a home and you promised to pay it back. Just because your "investment" is no longer worth what you owe on it doesn't give you the right to throw your hands up in the air and tell the bank to deal with it. I find this especially abhorrent when the home owner can pay the mortgage but because he owes far more than it's worth decides to walk away - "strategic default". By walking away, you hurt everyone. You hurt your neighbors by further decreasing the value of their homes, the city and state with decreased revenues, and the tax payers because we ultimately have to pick up the pieces. But of course, you who choose to walk away don't really care about anyone else so you probably don't care about the trouble and turmoil you're causing the rest of us because it's just about you and the money, right?
Finally, sure I realize the banks are culpable. Greed became god and took the place of what's right and wrong with no thought tothe consequences. The here and now, the bottom line was all that mattered. No thought was given to what cause and effect the greedy decisions would have in the future. I see the same thing happening over and over again.
What happened to ethics? I cannot understand how a person or a business can function without ethics. It is not something you can turn off and on. Either you are ethical or you are not. You cannot be ethical in one area of your life or business and then decide if it's not to your greater good, the business's bottom dollar, or it's just too hard, that you can walk away from it. Ethics is a core value and helps define the character of an individual as well as a business. So I ask you Mr. Home Owner who just doesn't think it's financially wise to continue making mortgage payments because your home is no longer worth what you owe on it: Do you even care about the mess you're leaving for the rest of us to clean up? I guess not since it's obvious that you only care about yourself.